Turkey’s presidency announced the creation of a council headed by the vice president to coordinate and accelerate the winding-up of investment funds that authorities had ordered liquidated, after a crisis raised concerns over investors’ rights and the soundness of capital markets. President Recep Tayyip Erdogan said on Tuesday that the council had been given full authority to coordinate procedures related to the funds being wound up.
On September 17, authorities ordered the winding-up of 131 funds operated by 7 portfolio management companies after detecting unusual movements in the prices of shares linked to some of the funds.
Transaction scrutiny and a plan to settle dues
Authorities have begun scrutinising recent investment-fund transactions in the capital markets, while Turkey’s Capital Markets Board has presented a roadmap for paying investors whose entitlements have been fully reconciled, based on the status of assets and liquidity in the funds being wound up.
During a meeting with officials responsible for economic affairs and the relevant institutions, Erdogan stressed the priority of completing the winding-up procedures accurately, protecting investors’ rights in line with capital-market rules, and making payments fairly, properly and as soon as possible. He added that he had tasked the State Supervisory Council with examining the matter.
Suspected manipulation of thinly traded shares
The presidency said the crisis erupted after suspected manipulation of the prices of several thinly traded shares caused substantial losses and put pressure on investment funds to repay investors.
Around 500,000 investors hold stakes in more than 100 Turkish investment funds worth around 20 billion dollars, which were covered by liquidation orders issued during September.
Turkey will emerge from this matter as soon as possible, and its economy will emerge stronger
Measures to strengthen capital-market oversight
Erdogan said the government had defined the steps and roadmap for the process, stressing that capital markets would become safer and more stable, and that shortcomings would be addressed to improve the system’s efficiency and effectiveness.
Authorities plan to introduce additional administrative and legal measures to strengthen oversight of capital markets and prevent similar crises from recurring. The coordination council headed by the vice president will ensure overall coordination and accelerate the winding-up process while taking investors’ rights and the public interest into account.
